How the economies of China and Australia complement each other

Australia and China's economic partnership is based on the complementary nature of their economies and their shared position in the Asia-Pacific region. Australia is rich in natural resources and has significant potential to export the raw materials it needs to China, while China exports its manufactured goods to Australia. The increasing diversification of the Australian economy in recent years has also led to significant market potential in China for high-tech manufactured goods and quality services. Since the establishment of diplomatic relations between Australia and China in 1972, two-way trade between the two countries has grown significantly, from A$158 million in 1972 to A$9.2 billion in 1998.　　China is Australia's fifth largest trading partner. Australia's importance as a trading partner of China can be reflected in the quality of trade. Australia is China's largest supplier of bulk commodities, with Australian iron ore, wool and aluminum all being raw materials for China's production of major export earners such as high-quality steel and high-end clothing.　　In recent years, Australia has also seen significant growth in exports such as electromechanical products and telecommunications equipment.　　Australia is becoming an increasingly important exporter of services - Australian banks, law firms, insurance companies, accounting firms, information management and healthcare services are all playing an active role in China.　　China is Australia's fourth largest source of imports of goods, including textiles, toys, recreational and sporting goods, as well as footwear and menswear (non-knit). Investment Australian investment in China spans a wide range of sectors, from the agricultural economy, food/beverage processing, building materials and construction services, to urban infrastructure, environmental protection and information technology.　　Australia is also an important investment location for China: in 1998, Chinese investment in Australia totaled approximately A$2 billion. These Chinese investments in Australia are equally wide-ranging, and include some of China's largest investments in Australia, such as the Mt Chana iron ore mine (A$120 million), the Portland aluminum refinery (A$100 million), and MetroMeats (A$100 million).　　Chinese investments in Australia are considered to be of high quality: they are direct investments, often in the form of joint ventures, and thus provide direct employment opportunities for Australia and can contribute to the development of its exports.